After 1 Year, JCPenney Returns to Sales, Discounts

Attention Getter: Ron Johnson, JCPenney's CEO

Attention Getter: Ron Johnson, JCPenney’s CEO

Plano, TX—It was just a few days more than a year ago, when Ron Johnson, the ex-Apple retail head now chief executive at JCPenney, announced his “fair and square” strategy, an ambitious plan to convert the price-off, discount and coupon mindset into everyday low prices.

The vision was that consumers, who are constantly bombarded with sales prices and coupons, would appreciate a straightforward, “no-nonsense” price that would be the same day in and day out.

But after a year being balking at by competitors and retail analysts, not to mention consumers still yearning for those discount deals and shopping elsewhere, JCPenney is reportedly bringing back “targeted” discounts.

“Our sales have gone backward a little more than we expected, but that doesn’t change the vision or the strategy,” Johnson told the Associated Press. “We made changes and we learned an incredible amount. That is what’s informing our tactics as we go forward.”

Now shoppers will see that Valentine’s Day jewelry is 20% off. There will be more of the emailed $10-off coupons like those Johnson sent out at holidays time, though he referred to them as gifts rather than coupons.

“We will have a targeted sale in a certain category, when it means the most to our customer,” Kristin Hays, JCPenney spokesperson told the Wall Street Journal.

‘The Negative is 90% of the Store’

JCPenney also plans to add show the “manufacturer’s suggested retail” and then JCPenney’s retail on price tags and signage. Last week, rumors surfaced that the department store was putting the squeeze on vendors to inflate suggested retails or even make them up so the JCPenney retail would be even more appealing.

However, JCPenney has denied the allegations, and Johnson told the AP that all comparison tags would be approved by the company’s legal team.

Meanwhile, Johnson is continuing with his shops strategy, which will transform most JCPenney’s mainfloors into a series of shop concepts. Meanwhile, he has taken over the day-to-day marketing and merchandising functions that Michael Francis, former president, did. Francis, a veteran of Target, came to JCPenney in late 2011 but was let go last summer.

While Johnson’s “fair and square” pricing and promotion strategy soon will be by the wayside, don’t expect the shops concept, or even Johnson himself to be on the way out anytime soon.

In a Jan. 25 with CNBC, William Ackman, the activist investor whose $12 billion Pershing Square Capital Management makes it JCPenney’s largest investor, is firmly behind Johnson. The vast changes the retailer is undergoing will take some time, Ackman said.

And the shops strategy, still in its early states, has been strong. Ackman cited IZOD shop as being a “home run” already.

“The problem with the vision is it’s a small percentage of the store, which is the so-called ‘shop’ strategy,” said Ackman. “It’s 10% to 11% of the square footage.”

Meanwhile, it’s rest of the store where the business is tough.

“The negative is 90% of the store,” said Ackman. “Very, very difficult year. Sales results reported so far—mid-20s down comps. Those are numbers that no retailer likes to see.”

 

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